In a valley surrounded by seven small hills in western India, a new town is taking shape.

Its downtown of hotels, a town hall, and Mediterranean-inspired apartments sits beside a manmade lake. Row houses are being built. Uninterrupted power and water are promised – as are top-notch schools, a space education park designed with NASA know-how, and a Nick Faldo Golf Academy.

Lavasa could be the antithesis of today’s Indian cities – a green and orderly space free of the chaos and pollution of, say, Mumbai (Bombay), the sprawling megalopolis only three hours away. Slated to open later this year, it is the most ambitious of a slew of new townships being developed by the private sector, aimed at India’s burgeoning urban elite.

Such private towns advertise not just walkable streets and swish office buildings but also proximity to IT parks and special economic zones, whose professionals they aim to attract.

They also exemplify India’s uneven economic growth. Some townships have taken over farmland. Most keep hawkers and shanties at bay with gates and security guards, yet rely on a local supply of cheap labor – often the farmers who once owned the land.

The new townships “are an indicator that the rich in India are increasing rapidly,” says urban development expert Prakash Apte based in Mumbai. But “they’re also a sign of the growing inequality.”

Easing crowded cities

The surge in private townships – at least 36 are pending approval in the state of Maharashtra, where Mumbai is located – has come as rapidly growing populations put pressure on cities.

India's urban population is set to increase from the current 340 million to 590 million in 2030, a 40 percent increase in the total population, according to a recent McKinsey report. It’s a pace of urbanization second only to China.

To cope, India needs to add 700 to 900 million square meters of commercial and residential space – the equivalent of a new Chicago – every year, the report says. It also needs to invest $1.2 trillion in water, sewers, and power – more than eight times India's current per capita spending.

“The government alone cannot create such planned cities,” wrote Ajit Gulabchand, head of Hindustan Construction Co., which is developing Lavasa, in an recent op-ed. “A different model is required ... which is executed substantially by the private sector creating partnerships at different levels from planning, designing, policing as well as carrying out the municipal functions.”

Villagers complain

With the new developments has come controversy. Lavasa faces allegations of fraudulent acquisition of land (the 25,000-acre project will cover 20 villages), inadequate compensation for some villagers, and concerns over environmental impact.

Some villagers on the vast construction site say they won’t leave. Leelabai Margale, a widow with four children, sells tea and biscuits to construction workers in a shack on the side of a road that she says cuts through her land. Her land title deeds at the local record office were switched into the name of an “agent” company, she says.

In a tiny settlement of adivasis (tribals) nearby, Tumnabai Waghlekar says her family was offered just 700,000 rupees ($15,000) for 45 acres of land. She and her husband, whose family has lived in the area for seven generations, don't want to relocate, though her brother, who works for Lavasa, is trying to persuade them otherwise. “They want to move all the adivasis to one place, like a tourist village,” she says.

Lavasa officials reject these allegations. The company is buying land at market prices and offering incentives such as alternative land, free housing, and development of village facilities, says Suresh Pendharkar, Lavasa’s chief planner. Much of the land has been bought from investors who previously acquired it from farmers, he says. That is the case with the Margales and Waghlekars, he adds.

“If there is any substance to the complaints, it is not in the Lavasa deals,” Mr. Pendharkar continues. “Our project is so large, so audacious, we don’t want to get into any questionable practices.”

As for environmental impact, he says, the state government sanctioned the project only after assessing the risk.

Unlike 'anywhere in India'

Land acquisition is the main hurdle for such large-scale developments. Just two hours from Lavasa, a more modest township solved that challenge in a novel way. In the outskirts of Pune, some 120 farmers pooled 430 acres of land and became shareholders in their own development company.

The initiative “made landowners part of the development process, and gave them a continuous stream of revenue,” says Satish Magar, the company head. It also turned farmers into entrepreneurs – many of them now run township services.

Today, with 5,000 apartments and an IT park, Magarpatta City epitomizes middle-class order. It recycles its waste and generates some of its own power. It hosts a school, a market, and a garden where the national anthem is sung every morning. It has CCTVs and 1,200 security guards.

“It's great for families. You can walk your kid to school or walk to office, and you feel totally safe,” says Ranjit Singh Chauhan, an IT professional who lives and works there. “It's a clean city,” he adds. “You won't feel like that anywhere in India.”

If Mr. Chauhan has any complaint, it is the absence of city life, although Pune’s bright lights are just a bus ride away.

Help from the cities

In fact, while India's private minitowns offer escape from urban congestion, the successful ones such as Magarpatta are located close to a city because they rely on cities’ larger economy and social services, as well as its pool of servants, plumbers, and other workers.

The townships “depend on a larger infrastructure – education and social and health and transport – that only a large city can provide,” says Mr. Apte, adding that the IT sector doesn't generate enough employment to support a broader economy. He believes the township boom has more to do with real estate ventures than actual city building.

Lavasa is set deep in the hills and only reachable by car. But the aim is to make it a self-sustaining city for all classes, with 300,000 permanent residents and 2 million visitors and tourists, says Anuradha Paraskar, senior vice president oif marketing for Lavasa Corporation Ltd.

The town will eventually generate employment through IT companies and other nonpolluting industries drawn by government incentives, she says. And a range of housing is being constructed, including 50,000 one-room kitchen rental units for drivers and other service workers.